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Bloomberg) About five miles south of Groupon Inc.’s headquarters, at U.S. Cellular Field, there’s a veteran baseball player for the Chicago White Sox named Adam Dunn who is having a remarkable season. All he needs is a little help putting his numbers in the best possible light.
Dunn, the team’s designated hitter, has a B.S. batting average of .292, in a sport where players dream of hitting .300. Never heard of a B.S. batting average before? The B.S. stands for “before strikeouts.” Add them back and Dunn’s true batting average was .165 as of Aug. 2, the lowest in Major League Baseball among players with at least 295 at-bats.
If you like that example of stupid math tricks, then you’ll love the bizarre profitability metric Groupon has invented called “adjusted consolidated segment operating income.” This nonstandard measurement excludes most of the online coupon distributor’s operating expenses, making the hugely unprofitable startup seem comfortably in the black. Think of this as its own version of a B.S. batting average, only with a different name.
You would be hard-pressed to find any clear explanation in Groupon’s latest registration statement of why adjusted CSOI provides useful information to investors, even though the Securities and Exchange Commission’s rules say the company is required to offer one. Not surprisingly, the SEC is taking a hard look at Groupon’s disclosures ahead of the company’s hotly anticipated initial public offering, according to multiple news reports last week. ..............(more)
The complete piece is at:
http://www.bloomberg.com/news/2011-08-04/groupon-s-strikeouts-reveal-an-unspoken-truth-jonathan-weil.html